Blog Article

Renting Vs Buying

Where
you choose to live is one of the most important decisions you’ll have to make
in your adult life. Whether you choose to rent or buy, it is likely that a
significant portion of your household income will go toward your rent or
monthly mortgage.

Renting
a home

One
consideration is that renting a house or apartment can sometimes be
cheaper than buying a property. Many young couples in Australia choose to live
in urban centres or waterfront suburbs. Although they cannot afford to buy a
home there, rent is an affordable alternative. In some instances rent prices are cheaper than mortgage payments
on the same home.

Depending
on your suburb, current property market and how long you intend to stay in
the house, buying might be a better option than renting. To determine whether
you should buy or rent, check out Australian Securities & Investments
Commission’s Rent vs Buy Calculator.

When moving
house, the first obvious question is how long you are intending to stay in your
current location. One major advantage of renting is that you don’t have to be
certain about your long-term plan when deciding where to live. Renters have the
option of moving after their lease is up – generally after one year – which provides
flexibility. If you are a renter, you can move to a different suburb easily and
with relatively few associated costs.

If
you are a home buyer and decide to move after a short period of time, moving
becomes more costly due to the expenses associated with buying and selling
your home.

As
a renter, in addition to avoiding the effort and expense of selling your home,
you have another advantage over homeowners: if something breaks, it is not
always your responsibility to fix it. Since landlords are responsible for all
major repairs or upgrades to appliances, renters do not have to incur
unexpected expenses.

However,
as renters are well aware, renting has its drawbacks as well. As a renter, you
can never be sure if you will have to move again. Particularly, if the suburb
you live in is in a ‘hot’ market or is experiencing a high degree of
densification, you always have the risk that your landlords will increase rent
or sell the property, forcing you to move at a time that is not planned or
convenient for your family.

As
well, renters are limited in their ability to customise their homes to suit
their tastes. For example, landlords often prohibit the use of many paint
colours and don’t generally permit any major modifications to the layout of
their homes (such as removing walls, and changing flooring of fixtures). For
these and many other reasons, many couples or families decide to take the
plunge into home ownership.

Buying
a home

Perhaps
the most common reason to own your home is
that, eventually, you stop paying rent (and start earning equity).

For homeowners,
it typically takes 25-30 years (maximum) to pay off their homes. If you decide
to buy a house, you can also enjoy the fact that the money you pay each month
is earning you equity in your home (which, by the way, is likely to increase in
value by the time you sell). Rather than spending money on a rental property,
which will provide you with no long-term assets, putting money towards your own
home will pay off in the long run.

Other options

It
is clear that there are good reasons to rent or to own. But are there other
options?

The
answer is yes; you do have other options.

Many
young buyers are choosing to buy an investment property as a way to break into
the market while still renting themselves, or living at home with their parents
own. This provides several advantages:

1.Rental income: After saving the initial
deposit down payment for an investment property, you can use the rental income
from your investment property to pay your current rent and/or supplement your
income.

2.Location, location, location: If you are like
the many couples who want to live near the beach or CBD but cannot afford to
buy there, having an investment property allows you to have the best of both
worlds. Get your foot in the door by purchasing a property in a more affordable
suburb while still living the lifestyle.

3.Uncertainty: For many young couples establishing
in their careers, renting is more suited to their lifestyles. If you are in
this position, buying an investment property allows you a source of income, and
an ‘in’ to the real estate market, while still allowing you the flexibility
afforded to renters in terms of cost and ease of relocation.

At
the end of the day, you have to consider pros and cons when making a decision
whether to rent or buy a home. If you do decide to buy, you can always maintain
it as a rental property while still renting your current home. If you would
like more information about buying in to the Hervey Bay Real Estate market,
please Whitney Real Estate.